By Nick Toscano
Rio Tinto boss Jakob Stausholm has contradicted the Trump administration’s claim that Australia broke a promise to limit aluminium shipments to the United States, revealing the White House made a plea for Australian suppliers to boost exports after Russia’s invasion of Ukraine in 2022.
Rio Tinto, the second-largest Australian miner, is the biggest supplier of foreign aluminium to the US, making it one of the companies to be hit the hardest if Donald Trump proceeds with his plan to introduce 25 per cent tariffs on imported aluminium and steel.
Donald Trump after signing an executive order for 25 per cent tariffs on steel and aluminium imports.Credit: Bloomberg
While Trump has said he would consider exempting Australia from the tariffs, senior US trade officials have since accused the Australian government of “flooding” the US market with aluminium in breach of a commitment given during the first Trump presidency that it would limit its exports to America.
Stausholm, who arrived in Washington DC this week to meet members of the new administration, said there had “not been any breaches”.
“Everything that we have exported has been aligned with the wishes of the government in the US,” he said.
To secure an exemption from previous tariffs in 2017-18, the Australian government had agreed to place a “ceiling” on the volume of aluminium it would send to the US, Stausholm said.
“But, suddenly, when the Ukraine war happened, and the US stopped importing aluminium from Russia, they were lacking aluminium, and they wanted more,” he said.
Rio Tinto chief executive Jakob Stausholm.Credit: Jamila Toderas
Russia had been a major aluminium supplier to the US, behind Canada and Mexico, before the Biden administration moved to restrict Russian imports due to its invasion of Ukraine.
Rio Tinto supplies aluminium to the US mainly from its Canadian smelters. Australia’s four aluminium smelters, meanwhile, export only about 10 per cent of their production to the US, which accounts for just 2.5 per cent of US aluminium supplies.
“Australian imports of aluminium into the US are tiny, tiny, tiny,” Stausholm said. “So let’s not take this out of proportion.”
He also commended Prime Minister Anthony Albanese on how the government had been engaging with the Trump administration over tariffs so far. “The communication between the prime minister and president has been very successful,” Stausholm said.
The comments on Thursday came as ASX-listed Rio Tinto posted a weaker-than-expected underlying profit of $US10.9 billion ($17.1 billion) for 2024 amid a downturn in demand and prices for the steel-making material iron ore, the company’s biggest cash earner.
For years, booming demand from Chinese steel mills, which process iron ore in steel-making furnaces to churn out molten pig iron, have delivered mega-profits for Australian miners BHP, Rio Tinto and Fortescue, and cemented iron ore’s position as the nation’s most lucrative export.
But weakening economic activity in China and a housing oversupply roiling its construction sector, which accounts for 30 per cent of its steel demand, have triggered a slowdown.
Softening Chinese iron ore demand also contributed to a 53 per cent plunge in half-year profit for another major West Australian iron ore miner, Fortescue Metals, led by billionaire chairman Andrew “Twiggy” Forrest.
Glyn Lawcock, an analyst at investment bank Barrenjoey, said four cyclones that hit the West Australian coast had disrupted iron ore deliveries from across the Pilbara, costing Rio Tinto more than 13 million tonnes of ore. “While mitigation plans are in place to offset around half of this over the course of the year, the system has limited ability to mitigate further losses from weather,” he said.
Rio Tinto’s final dividend had exceeded market expectations, bringing full-year dividends to $US4.02 a share, which “should be well received”, Lawcock said.
Shareholders sold off mining stocks in a wider market slump on Thursday, with Rio’s shares falling 1.5 per cent, its larger rival BHP losing 2 cent and Fortescue Metal plunging 6.2 per cent.
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